Aus housing

The good news is that house prices are falling at a slower rate than before, dropping 1.1% month on month.

They are falling quite sharply in Brisbane…

…which is also where they rose the most (note, “most” doesn’t mean most expensive, or even most over-other-time-frames, it just means on this series, indexed at one, measured from just prior to the pandemic).

We continue to view housing as the “Achilles heel” of Australia, noting that we are highly leveraged, at the household level, and, greatly exposed to changes in interest rates through predominantly variable rate mortgage exposures (great for banks, in the short run at least).

We reflect this via a preference for international shares, over domestic equities, at the DAA level, noting that at the moment the Aussie market is enjoying a reasonably solid tailwind thanks to the China reopening story (which is driving commodities, in particular, which we have lots of, in the ASX 200).

We also aren’t holding the home builders (across REITs, and building material stocks) and have fairly modest retail exposures, viewing most of them as over-earning and over-stocked, coming into Christmas.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.